Tencent moves into automotive with $150M joint venture

China’s internet firms are getting pally with giant state-owned automakers as they look to deploy their artificial intelligence and cloud computing services across traditional industries. Ride-hailing startup Didi Chuxing, which owns Uber China, announced earlier this week a new joint venture with state-owned BAIC. Hot on the heels came another entity set up between Tencent and the GAC Group.

GAC, which is owned by the Guangzhou municipal government in southern China, announced Thursday in a filing it will jointly establish a mobility company with social media and gaming behemoth Tencent, Guangzhou Public Transport Group alongside other investors.

The announcement followed an agreement between Tencent and GAC in 2017 to team up on internet-connected cars and smart driving, a deal that saw the carmaker tapping into Tencent’s expertise in mobile payments, social networking, big data and cloud services. Tencent, which is most famous for its instant messenger WeChat, went through a major restructuring last October to place more focus on enterprise-facing services, and the GAC tie-up appears to fit nicely into that pivot.

The fresh venture will bank a capital infusion of 1 billion yuan ($149 million) with GAC owning a 35 percent stake. Tencent and Guangzhou Public Transport will take up 25 percent and 10 percent, respectively.

A flurry of Chinese internet service providers have made forays into the automotive industry, marketing their digital and machine learning capabilities at old-school automakers. Besides Tencent, GAC has also recruited telecommunications equipment maker Huawei and voice assistant startup iFlytec to upgrade its vehicles. Search titan Baidu, on the other hand, operates an open platform for autonomous driving cars and has chosen state-owned Hongqi to test out its autonomous driving solutions. Ecommerce behemoth Alibaba has also set foot in transportation with a smart sedan jointly developed with state-owned SAIC.